Allentown mayor's former political consultant and friend pleads guilty in connection with FBI probe

PHILADELPHIA – His whereabouts a mystery for nearly a year, Mayor Ed Pawlowski's former political consultant and friend returned to federal court Thursday to face criminal charges in connection with an FBI investigation into Allentown's contracting processes.

Mike Fleck, 40, pleaded guilty to one count of conspiracy to commit extortion and bribery offenses and a single count of tax evasion, according to court documents filed Thursday morning.

According to court documents, Fleck, a former Easton City Councilman, worked with several unnamed public officials in Reading and Allentown to deprive citizens of their "right to honest services" through "bribery and kickbacks."

"Time and time again this was done for a purpose, that is official action, including contracts, in exchange for things of value," Assistant U.S. Attorney Joe Khan said during the hearing before U.S. District Judge Juan R. Sanchez.

During the 11/2-hour hearing Fleck repeatedly assured Sanchez he understood the impact of his guilty plea, which could expose Fleck to a 10-year prison sentence even with consideration from prosecutors for his ongoing cooperation in the case.

"You're looking at 10 years on the guidelines. Understanding that, is it still your decision to plead guilty?" Sanchez asked.

"Yes your honor," Fleck replied.

Fleck's sentencing is scheduled July 25, but because his plea agreement with prosecutors is contingent on his cooperation in the ongoing investigation and any trials, the date could change.

Court documents detail schemes involving multiple donors in both cities, several of whom have been named in previous guilty pleas from other Allentown officials. And, as in previous court filings, an official identified as Public Official No. 3 is implicated.

Public Official No. 3 is described as an Allentown official who ran campaigns for state and federal office. That description matches only Pawlowski. Pawlowski has not been charged.

Mark Schamel, a member of Pawlowski's legal defense team, said in a written statement that it was "disappointing" to learn about Mike Fleck's illegal conduct.

"We trust that his desire for self-preservation and to avoid prison for his crimes will not outweigh his moral obligation to the truth," Schamel said. "If Mike will tell the truth, it will become clear that the Mayor was not a participant in any wrongdoing. While we feel very badly for Mike and his family and the terrible situation he is in, we remain hopeful that he will not continue to misrepresent the truth and hurt other innocent people simply to save himself."

In one instance, Fleck is accused of meeting with Public Official No. 3 to devise a plan to extort campaign contributions from a group known as Law Firm No. 4. According to court documents, Public Official No. 3 was upset to learn that Donor No. 4, who is not identified, "expressed doubt" about his law firm's willingness to make future campaign contributions.

"Really! I've given him millions of dollars…relatively, compared to other law firms, they've given nothing," Public Official No. 3 allegedly said, according to court documents. ""[Donor No. 4] for sure will get nothing now… You know, f--- them! And I'm not gonna [award work to Donor No. 4's law partner] or anything. Screw it all!"

Fleck allegedly responded by saying he would "beat the crap out of" Donor No. 4 making it clear, according to court documents, "that Law Firm No. 4's ability to receive future legal contracts would be imperiled if the firm did not kick back adequate campaign contributions to Public Official No. 3."

For months, Fleck's location has been unknown. He was last seen in his Highland Street home in July as long-haul movers packed his belongings. A week earlier, FBI agents had raided Allentown City Hall seizing cell phones, computers and hundreds of thousands of documents related to city contracts. Fleck shuttered his business, H Street Strategies, on July 2, the same day as the raid.

Fleck told the judge Thursday that he is working in a sales position in the automotive industry, but following the hearing defense attorney Philip D. Lauer declined to say where Fleck is living.

"He's made some personal and family decisions that he thought he had to make," Lauer said.

At Fleck's sentencing Sanchez will be required to take into consideration how much money was involved in the bribery conspiracy, the involvement of elected officials and his effort to obstruct the investigation

After FBI agents first contacted Fleck in March 2015, he claimed that he had not disclosed the meeting to anyone when he had told others "with the intention of warning Public Official No. 3 that the FBI was on to him," Khan said.

Those considerations add up to a recommended sentence under federal guidelines that exceeds the 10-year maximum penalty provided under the laws Fleck admitted breaking, Sanchez noted.

Sanchez noted that under the plea agreement, Fleck is also giving up most of his rights to appeal his sentence.

"The only way you can file an appeal is if I give you more than 10 years," he said.

Since the raid, several city officials have pleaded guilty for their roles in steering contracts to campaign donors. Former assistant solicitor Dale Wiles and former finance director Gary Strathearn admitted that they conspired to award the city's delinquent tax collection contract, previously scored in favor of a different vendor, to two companies whose principals donated to Pawlowski.

Controller Mary Ellen Koval was also forced to resign in January when she pleaded guilty to conspiracy to commit honest services fraud for her efforts to steer contracts to campaign donors.

Koval was mentioned in the charges against Fleck which allege that she met with Fleck and Public Official No. 3 in 2014 and 2015 to help someone identified as Donor No. 1 to receive a no-bid contract from Allentown "as a reward" for the donor's agreement to raise campaign contributions for Public Official No. 3.

During the same period, city officials were preparing to ink a no-bid contract with Ciiber, a cybersecurity company financially backed by Jack Rosen, a top fundraiser for President Barack Obama and other high-profile Democrats, according to emails obtained by The Morning Call in a right-to-know request. The contract with Ciiber was canceled in mid-July after the federal investigation was revealed.

Jack Rosen, his son Jordan Rosen and other family members gave a collective $30,000 in campaign contributions to Pawlowski's campaign for U.S. Senate on June 30, campaign finance records show.

Fleck stood to provide important information to the FBI as one of the only members of Pawlowski's inner circle. He was the mayor's political consultant for several years and also a close friend to Pawlowski and his family. Fleck's family vacationed with Pawlowski's and Fleck was known to spend time with Pawlowski's children.

Allentown Council President Ray O'Connell said Fleck's guilty plea makes it imperative that the mayor step down. The no-confidence resolution that council passed in January asking Pawlowski to resign still stands, he said.

"Each day this web becomes more entangled," O'Connell said. "Each day the cloud over the city becomes darker. Each day as we move forward the uncertainty grows in the ability of the mayor to lead this city."

In addition to his alleged role in the political conspiracy, Fleck is also accused of evading federal taxes due by he and his wife. According to court documents, Fleck received $921,951 in gross income between 2011 and 2013 including money received for his political consulting. Fleck evaded taxes by "making cash withdrawals of company funds in order to knowingly pay certain expenses with company funds" and "reporting to the IRS that certain expenditures of company funds were business expenses when in fact they were personal expenses."

Fleck filed tax returns for he and his wife concealing company funds of $130,897, and he failed to pay $43,467 in payroll taxes, according to charging documents.

In the charging document filed against Fleck, interactions with five unnamed donors are detailed as well as developer Ramzi Haddad. Haddad pleaded guilty in connection with the case in September. Below is a summary of the alleged actions involving each donor:

Donor No. 1: Between January 2014 and May 2015, Public Official No. 3, Koval and Fleck met to help Donor No. 1 receive a "no-bid" contract from Allentown as a reward for Donor No. 1's agreement to raise campaign contributions for Public Official No. 3.

Donor No. 2: Between April 2014 and June 2015, Eron Lloyd, a special assistant to Reading Mayor Vaughn Spencer; Public Official No. 1, a Reading official matching Mayor Vaughn Spencer's description; and Fleck met to help Donor No. 2's company receive a contract from Reading in exchange for the donor's agreement to raise campaign contributions for Public Official No. 1.

In August 2014, Public Official No. 3 agreed to help Donor No. 2's company receive a contract from Allentown as a reward for Donor No. 2's agreement to raise campaign money for Public Official No. 3.

In December 2014, Koval sent Donor No. 2 an email requesting campaign contributions as consideration for her efforts to award a contract to Donor No. 2's company.

Donor No. 3: Between April 2014 and May 2015, Donor No. 3 met with Public Official No. 1, Public Official No. 3, Fleck and others to discuss trading municipal contracts in Allentown and Reading in exchange for campaign money from a political action committee over which Donor No. 3's company had "influence and control."

Public Official No. 1 directed an employee of Fleck to solicit a campaign donation from Donor No. 3's company as a reward for Public Official No. 1's efforts to convince Reading officials to award a competitively-bid contract to Donor No. 3's company.

Donor No. 4: In January 2015, Public Official No. 3 and Fleck met to design a plan to "extort" campaign donations from Law Firm No. 4. Upon hearing that Donor No. 4 had "expressed doubt about Law Firm No. 4's willingness to make future contributions," Public Official No. 3 said "Really! I've given him millions of dollars…relatively, compared to other law firms, they've given nothing. [Donor No. 4] for sure will get nothing now… You know, f--- them! And I'm not gonna [award work to Donor No. 4's law partner] or anything. Screw it all!"

Donor No. 5: Between April 2014 and May 2015, Donor No. 5 met with Fleck and Public Official No. 3 to discuss making campaign contributions to Public Official No. 1 and Public Official No. 3. In February 2015, Public Official No. 1 sent a letter of support for a proposal in which Donor No. 5 had a business interest in consideration for Donor No. 5's contribution to Public Official No. 1

Ramzi Haddad: Haddad, an Allentown property owner, pleaded guilty in September to conspiracy to commit bribery for providing food, drinks and campaign donations to Public Official No. 3 in exchange for preferable treatment by Allentown. Public Official No. 3 forwarded an email about one of Haddad's zoning applications to his personal email account. From his person email, he forwarded an email chain to an employee of Fleck's along with "guidance for Haddad."

Public Official No. 3 also sent a letter of support for a proposal in which Haddad had a business interest in consideration for Haddad's agreement to raise money for Public Official No. 3.